Copying others… why do we do it? There have been numerous scientific studies that try to answer that question, with various approaches: one experiment shows that people tend to copy other people who have the same goal as them and another one shows that drivers tend to stay behind expensive cars even if they drive below the speed limit but they overtake cheaper cars in the same situation. Now let’s think about trading and its social aspect: we copy people with the same goal as us – making money – and we follow the lead of successful people – the ones with expensive cars or good trading records. Makes sense in a way, so let’s see what the best platforms for social trading are.
The top 5 social trading platforms
(With No Particular Order)
1. Etoro - It was founded back in 2007 in Tel-Aviv and it started out as a downloadable trading platform but the “social” concept was introduced in 2010 when eToro launched the OpenBook and its Copy-Trading feature. The platform makes all trades visible by other traders and allows users to follow and copy the top traders. It quickly grew in popularity, becoming one of the main players on the social trading scene. In 2013 eToro introduced 110 stock CFDs as tradable products and later in 2014, 130 German and British stocks were added to the offering. In 2013 eToro had over 3 million registered accounts, making it probably the biggest social trading platform around.
2. ZuluTrade - It seems like 2007 was a good year for the future of social trading because that’s when ZuluTrade was also founded. The same principle applies: users can follow top traders and profit… or lose according to their performance. Several brokers are connected to the network and ZuluTrade receives compensation per each trade executed successfully with each broker. This compensation amount is split between ZuluTrade and the signal provider that initiated the trade which was copied by his followers. As a special feature, ZuluTrade allows you to see if the trader you are following starts to perform differently than previously: ZuluGuard. Then it’s up to you to decide whether you will continue following or not.
3. Sirix - It is a web based platform launched by Forex technology provider Leverate. Brokers who use Leverate technology also offer the Sirix platform which has an integrated social trading feature. New traders can view the profiles of “Master” traders, compare them and then start following them. According to Leverate, the updated platform “introduces sleek advanced trading” but at least for the time being we can’t see a huge interest for this platform.
4. Tradeo - It is a Social Trading Platform and Brokerage which operates mostly similar to the other social platforms: it lets you see the trades and performance of other traders and then to copy their trades (both manually and automatically). On top of that, Tradeo allows you to chat live with other traders and you can even build your own “human portfolio” by copying more than one trader. In May 2014, Tradeo announced they will become a Forex Brokerage as well so they no longer support external brokers; you have to trade with them if you want to use their social platform.
5. FX Junction - It is an open social network of traders, not limited to Forex but also metals, commodities and indices. This social platform is focused on simplicity and it bridges directly into your MT4 platform, connecting you with the entire FX Junction network. However, according to them, they have 17,259 traders registered and 559+ brokers supported. Comparing these numbers with eToro’s 3 million users… they don’t look so hot.
Extra for binary options traders: CommuniTraders Lately Binary Options have become more and more popular, attracting increasing numbers of traders and of course, someone had to offer binary options traders the possibility to connect and trade together. This is what CommuniTraders by Binaryoptionsthatsuck.com tries to achieve and so far I can say it’s a bold attempt which still needs improvements. Binary Options technology is less advanced than Forex and this makes it hard to implement bug-free social platforms but the guys at Binaryoptionsthatsuck.com constantly try nonetheless and as a result they will soon launch CommuniTraders 2.0 which will have all the mainstream features like leader boards, copying, following and sharing trading opinions. Will it be a blast? I think it will, but only time will tell.
The bottom line of social trading
Whether you choose to follow others or to trade on your own is a decision which only you can make. I personally will not follow others because I invested too much money, time and headache in my trading education and I want to be the only one responsible for my win or loss. When I drive I set my own speed and I don’t care about what the guy in front of me is doing, no matter the brand or cost of his car. Same with trading. Without wishing to put you off, let me state a fact: the #15 ranked trader on ZuluTrade at the time of writing this article has 18 losses out of 20 trades… a follower says he lost 750 pips in one week and another lost 70% of his account… social trading at its best…